Posted: January 31st, 2023

The case of Skilling v. United States

Case Brief
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Facts
The case of Skilling v. United States, 561 U.S. 358 (2010 – Essay Writing Service: Write My Essay by Top-Notch Writer) considered matters that arose out of a prosecution of Jeffrey Skilling. The defendant had served as the Executive officer of Enron for a long time before the collapse of the company. Subsequent to the collapse of Enron, the prosecution brought charges for the conviction of Skilling under the ambit of 18 U. S. C.§§371, 1343, 1346 which is the relevant statute that deals with matters of conspiracy to commit fraud and to deprive honest services under the laws of the United States. The jury trials found Skilling guilty as charged under the conspiracy to commit honest fraudulent services. The conviction was further affirmed by the Firth Circuit court as well as the Court of Appeals of the United States. This matter concerned a cause of action that was brought by the prosecution against the defendant Jeffrey Skilling for a claim of culpability under provisions 18 U. S. C.§§371, 1343, 1346 of the federal statute for the harm occasioned to Enron Corporation. The prosecution presented its position before the court in support of the fact that the defendant had violated the law by his action of non-disclosure of his financial interest. The prosecution asserted that having been persuaded that the there was a transaction which was of the kind that he required the full disclosure of the employee to the company, he did not conduct himself as required. The matter proceeded before the jury who found the defendant culpable and this position was further affirmed by the Fifth Circuit court as well as the United States Court of Appeals. During the proceedings in the Supreme Court, the decision of the court was not unanimous and the majority decision was read by Justice Ginsburg while Judge Scalia led the dissent opinion. The matter proceeded for a trial before the jury with the prosecution seeking conviction for breach of fiduciary duty by the defendant against the Enron Corporation for financial losses. The jury found in favor of the prosecution against the defendant and awarded conviction as prayed. The defendant sought to have a fresh trial and the motion was accepted by the Fifth Circuit Court and a verdict arrived at in support of the position held by the Jury. In view of the finding by the Fifth Circuit Court, the defendant filed a further appeal at the Court of Appeals and the court upheld the conviction as rendered by the Fifth Circuit Court. The defendant appeal to the Supreme Court of the United States for a further hearing
Issues
a) Whether the defendants breached the fiduciary duty and the honest services statute; and if so,
b) Whether the injury caused to the corporation was a consequence of the non-disclosure of the defendant.

Decision and Reasoning
In reaching its finding on Skilling case, the Supreme Court of the United States concluded that the trial of Skilling had been conducted in a fair manner. The court proceeded to observe that the defendant has failed to demonstrate that the jury was biased and that this caused a lot of prejudice to him. The Supreme Court also noted that under the provision §1346, the drafters of the law intended to limit the scope of intangible and rightful honest services as stipulated under the statute. Moreover, the court asserted that the provision on intangible and honest services only covered kickbacks and bribery claims as subsets of corrupt schemes. The court concluded that the actions of the defendant did not involve actual bribery or kickbacks that could be well placed under §1346 of the statute.
The judgment of the court as read by Justice Ginsburg paid sufficient attention to the question of the constitutionality of the concept of honest services fraud as stipulated under §1346 of the statute. The defendant was convicted by the trial court for theory that pointed out to a possible scenario of honest services wire fraud within the Enron Corporation and as a possible reason behind the collapse of the company. The Supreme Court made a finding to the effect that provision §1346 was not unconstitutional or remotely vague. However, the court observed that the actions of the defendant did not fall into the kickback and bribery category in light of the facts that the prosecution tendered before the court. The opinion of the court as read by Justice Ginsburg brought into light the history that informed the decision of the Congress to enact the statute. The court found that the statute provision could not be stricken down because it was not inherent vague or unconstitutional in its wording and in doing this, he pointed out the position as held out by the court in the case of Hooper v. California, 155 U. S. 648, 657 (1895).
The Supreme Court of the United States found in favor of the defendant and reversed the finding of the Court of Appeals, the Fifth Circuit Court and the Jury. In arriving at its decision by a majority vote, the Supreme Court argued that the even though the defendant was liable for the actions as stipulated, his conduct did not meet the requirements stipulated under 18 U. S. C.§§371, 1343, 1346 to warrant conviction. In particular, the majority of the court emphasized that a person is personally liable for the offence under the statute where he or she conducts himself in a manner that depicts bribery and kickbacks under the statute. The highest court affirmed the position that the defendant was not liable and that the rationale of reasoning of the court in the decision was that18 U. S. C. §§371, 1343, 1346 provides that the conduct of the defendant must be directly linked to the fiduciary duty owed. The effect of the breach of the statute is to impute culpability on defendant in instances where the defendant fails to gives a notice of the disclosure within a reasonable time. In arriving at its finding in favor of the defendant, the court emphasized that although the defendant had not issued the notice of disclosure as by law required in light of the fiduciary duty owed to the corporation, the same did not quality for conviction under 18 U. S. C.§§371, 1343, 1346. Further, the judge said that all that was required of the defendant was a proof that he had put into use the instructions as properly explained in the duty to the company as an employee as the statute stipulates.
Dissenting Opinion
The Supreme Court gave majority decision on the matter as read by Justice Ginsburg and found for the defendant in this particular case. However, Justice Scalia offered a dissenting opinion in which case she offered her considered view that the finding that the defendant was not in breach was not properly made within the context of 18 U. S. C.§§371, 1343, 1346. The judge observed that the finding that the defendant was not in breach of any fiduciary duty was in error. This observation is based on the premise that the 18 U. S. C. §§371, 1343, 1346. as well as common law stipulates a contractual relationship between the corporation and the employee. The judge expressed that it is important that the court should have found the defendant liable under an expressed warranty doctrine for the non-disclosure of the information in the honest services fraud requirement. Indeed, it is inconceivable that a proper court of law would be in a position to find the defendant liable for breach of fiduciary duty which led to the injury on the corporation while at the same time finding for financial loss on the defendant. There was a dissenting opinion of the court from Justice Scalia whose view was that the statute in its provision §1346 was vague and should have been a subject of striking down. The judge asserted that the specifications contained in 18 U. S. C. §1346 (2006 – Write a paper; Professional research paper writing service – Best essay writers ed., Supp. II) that notes “a scheme or artifice to deprive another of the intangible right of honest services” is a vague drafting of the legislation that is currently out of sync with common law requirements. Moreover, Judge Scalia noted that the majority decision that equated the “honest services fraud” provision under §1346 to “bribery and kickbacks” is fundamentally misguided. Justice Scalia noted that the concept of kickback and bribery was a vague doctrine whose position did not justify the legal requirement as foreseen by the drafter of the statute.

Analysis and Personal Opinion
The court also observed that it would be substantially unfair if the congress or the government was to criminalize every act of criminalizing “undisclosed self-dealing by a public official or private employee”. In light of this position, the court found that the lenity rule that requires definiteness of an action in order to warrant conviction under provision of §1346 is fundamentally important. In the instant case of Skilling, the prosecution argued that the defendant did not disclose his financial interests as he sought to act for the corporation. It is important to note that under the provision §1346, action that constitute kickback or bribery are expressly illegal and criminalized for any public officials or employees of companies. It is important to note that whereas the defendant failed to disclose his financial interest in acting of the company as he did, the correct position at law is that the presence of a fiduciary duty on the employee is imperative.
If I were sitting as a judge in the instant case, I could have found the defendant culpable under the provisions of 18 U. S. C. §1346 (2006 – Write a paper; Professional research paper writing service – Best essay writers ed., Supp. II). It was incumbent on the prosecution to prove that the defendant acted in furtherance of his intentions to deceive and that the undisclosed conduct led to some financial implications on the corporation. The conduct of the defendant directly affected the financial health of the corporation that he served as an employee although it is noteworthy that there was no direct intent to defraud. In my view, the prosecution established that the corporation suffered significant financial loss as a result of the purported interest of the defendant. Moreover, it is a fundamental legal requirement that the actions must amount to fraud and that failure to disclose actions only serve to justify the offence under §1346 on conspiracy on right honest services. The defense presented case laws that sought to dispute that position that the defendant committed honest services fraud as stipulated under the federal statute. On the other hand, the prosecution emphasized the position that the defendant was in violation of his fiduciary duty and that he owed the duty of absolute disclosure to the corporation hence my decision in favor of the prosecution.
Conclusion
It is clear that 18 U. S. C. §1346 provides a strict standard that gives the room for the determination of the conducts that fall under the honest services fraud statute. The main question before the Supreme Court was the character and justification of fiduciary duty and whether the actions of the defendant could be rightly placed under 18 U. S. C. §1346. Principally, the aspect of the character of bribery and kickback that amount to breach of fiduciary duty and the limitations of the statute on the offences by public officials as well as employees of a corporation became a major concern for the court.

References

Skilling v. United States, 561 U.S. 358 (2010 – Essay Writing Service: Write My Essay by Top-Notch Writer)
18 U. S. C. §1346 (2006 – Write a paper; Professional research paper writing service – Best essay writers ed., Supp. II)
Hooper v. California, 155 U. S. 648, 657 (1895)

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